The conflict between production and orders: A warning sign for the US economy in 2026

According to Chris Williamson, Chief Global Market Intelligence Economist at S&P, data from Golden Ten Data indicates that the US economy is experiencing a concerning contradiction. While manufacturing in December maintained growth momentum, order backlogs have fallen into decline.

The unprecedented gap between production and demand

This phenomenon is at its most severe since the 2008-2009 financial crisis. The gap between manufacturing growth and declining orders has widened to a record level, reflecting an imbalance in the economy. Without improvements in demand, current production levels clearly cannot be sustained long-term.

Direct impact on employment and production costs

One quarter is a critical period for assessing trends, and in Q4, the current fragility of manufacturing has become a major issue. If manufacturers are forced to cut capacity, the labor market will be directly affected negatively. At the same time, rising cost pressures are forcing US businesses to consider passing this burden onto consumers through price increases, while most of the cost increases are related to tariffs.

Small signals of inflation but concerns remain

2026 may bring some positive signals regarding input cost inflation. In December, input cost inflation slowed to its lowest level since January of the previous year, indicating that the impact of tariffs on inflation may have peaked since summer. However, costs continue to rise monthly at a high rate, demonstrating that US businesses still face greater cost pressures compared to competitors in other developed economies.